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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-32986             November 11, 1930

FRANCISCO JARQUE, plaintiff-appellee,

vs.
SMITH, BELL & CO., LTD., ET AL., defendants.
UNION FIRE INSURANCE CO., appellant.

Benj. S. Ohnick for appellant.

Vicente Pelaez for appellee.

OSTRAND, J.:

The plaintiff was the owner of the motorboat Pandan and held a marine insurance policy for the sum of P45,000
on the boat, the policy being issued by the National Union Fire Insurance Company and according to the
provisions of a "rider" attached to the policy, the insurance was against the "absolute total loss of the vessel only."
On October 31, 1928, the ship ran into very heavy sea off the Islands of Ticlin, and it became necessary to
jettison a portion of the cargo. As a result of the jettison, the National Union Fire Insurance Company was
assessed in the sum of P2,610.86 as its contribution to the general average. The insurance company, insisting
that its obligation did not extend beyond the insurance of the "absolute total loss of the vessel only, and to pay
proportionate salvage of the declared value," refused to contribute to the settlement of the general average. The
present action was thereupon instituted, and after trial the court below rendered judgment in favor of the plaintiff
and ordered the defendant National Union Fire Insurance Company to pay the plaintiff the sum of P2,610.86 as
its part of the indemnity for the general average brought about by the jettison of cargo. The insurance company
appealed to this court and assigns as errors (1) "that the lower court erred in disregarding the typewritten clause
endorsed upon the policy, Exhibit A, expressly limiting insurer's liability thereunder of the total loss of the wooden
vessel Pandan and to proportionate salvage charges," and (2) "that the lower court erred in concluding that
defendant and appellant, National Union Fire Insurance Company is liable to contribute to the general average
resulting from the jettison of a part of said vessel's cargo."

I. As to the first assignment of error, little need be said. The insurance contract, Exhibit A, is printed in the English
common form of marine policies. One of the clauses of the document originally read as follows:

Touching the Adventures and Perils which the said National Union Fire Insurance Company is content to
bear, and to take upon them in this Voyage; they are of the Seas, Men-of-War, Fire, Pirates, Rovers,
Thieves, Jettison, Letters of Mart and Countermart, Surprisals, and Takings at Sea. Arrest, Restraint and
Detainments, of all Kings Princes and People of what Nation, Condition or Quality so ever; Barratry of the
Master and Marines, and of all other Perils, Losses and Misfortunes, that have or shall come to the Hurt,
Detriment, or Damage of the said Vessel or any part thereof; and in case of any Loss or Misfortunes, it shall
be lawful for the Assured, his or their Factors, Servants, or assigns, to sue, labour and travel for, in and
about the Defense. Safeguard, and recovery of the said Vessel or any Charges whereof the said Company,
will contribute, according to the rate and quantity of the sum herein assured shall be of as much force and
Virtue as the surest Writing or Policy of Insurance made in LONDON.

Attached to the policy over and above the said clause is a "rider" containing typewritten provisions, among which
appears in capitalized type the following clause:

AGAINST THE ABSOLUTE TOTAL LOSS OF THE VESSEL ONLY, AND TO PAY PROPORTIONATE
SALVAGE CHARGES OF TEH DECLARED VALUE.
At the bottom of the same rider following the type written provisions therein set forth are the following words:
"Attaching to and forming part of the National Union Fire Insurance Co., Hull Policy No. 1055."

It is a well settled rule that in case repugnance exists between written and printed portions of a policy, the written
portion prevails, and there can be no question that as far as any inconsistency exists, the above-mentioned typed
"rider" prevails over the printed clause it covers. Section 291 of the Code of Civil Procedure provides that "when
an instrument consists partly of written words and partly of a printed form and the two are inconsistent, the former
controls the latter." (See also Joyce on Insurance, 2d ed., sec. 224, page 600; Arnould on Marine Insurance, 9th
ed., sec. 73; Marine Equipment Corporation vs. Automobile Insurance Co., 24 Fed. (2d), 600; and Marine
Insurance Company vs. McLahanan, 290 Fed., 685, 688.)

II. In the absence of positive legislation to the contrary, the liability of the defendant insurance company on its
policy would, perhaps, be limited to "absolute loss of the vessel only, and to pay proportionate salvage of the
declared value." But the policy was executed in this jurisdiction and "warranted to trade within the waters of the
Philippine Archipelago only." Here the liability for contribution in general average is not based on the express
terms of the policy, but rest upon the theory that from the relation of the parties and for their benefit, a quasi
contract is implied by law. Article 859 of the Code of Commerce is still in force and reads as follows:

ART. 859. The underwriters of the vessel, of the freight, and of the cargo shall be obliged to pay for the
indemnity of the gross average in so far as is required of each one of these objects respectively.

The article is mandatory in its terms, and the insurers, whether for the vessel or for the freight or for the cargo,
are bound to contribute to the indemnity of the general average. And there is nothing unfair in that provisions; it
simply places the insurer on the same footing as other persons who have an interest in the vessel, or the cargo
therein at the time of the occurrence of the general average and who are compelled to contribute (art. 812, Code
of Commerce).

In the present case it is not disputed that the ship was in grave peril and that the jettison of part of the cargo was
necessary. If the cargo was in peril to the extent of call for general average, the ship must also have been in great
danger, possibly sufficient to cause its absolute loss. The jettison was therefore as much to the benefit of the
underwriter as to the owner of the cargo. The latter was compelled to contribute to the indemnity; why should not
the insurer be required to do likewise? If no jettison had take place and if the ship by reason thereof had
foundered, the underwriter's loss would have been many times as large as the contribution now demanded. la w p h il.n e t

The appealed judgment is affirmed with the cost against the appellant. So ordered.

Malcolm, Villamor, Johns, Romualdez and Villa-Real, JJ., concur.

Separate Opinions

JOHNSON and STREET, JJ., dissenting:

In view of the fact that the policy of marine insurance which is the subject of this action contained a provision to
the effect that the risk insured against was "the absolute total loss of the vessel only," the undersigned are of the
opinion that the defendant insurance company is not liable to contribute to the gross average incident to the
jettison of some of the freight embarked on the vessel which was the subject of insurance. It is true that article
859 of the Code of Commerce declares that the underwriters of the vessel, of the freight, and of the cargo shall
be obliged to pay for the indemnity of the gross average in so far as is required of each one of these objects
respectively, but that provision evidently states a general rule to be applied where there are no words in the
contract in any wise qualifying the risk. This article, we think, should not be interpreted as abridging the freedom
of contract between insurer and the insured; and where, as in the case before us, the words defining the risk
plainly show that the risk is limited so as to exclude the obligation to contribute in case of jettison, the intention
expressed in the contract ought to be given effect. If the insurance had been written upon the cargo, the case for
the plaintiff would have been stronger; but it is certainly anomalous that an insurer of "the vessel only" should be
held liable for the jettison of cargo, to which a contract of insurance done not extend. The language used in the
policy of insurance in this case clearly limits the risk affirmatively to the vessel only, and the contract should be
given effect according to the intention of the parties.

The opinion of the court appears to proceed in part at least upon the idea that the insurer had a real interest in
the vessel, and that the insurance company was necessarily benefited by a jettison of cargo, since the act may
possibly have resulted in saving the vessel from destruction. This idea appears to us to ignore the most
fundamental conception underlying the law of insurance, which is that the contract of insurance is of an aleatory
nature. By this is meant that the contract is essentially a wager. It results that the insurer has no real interest
whatever in the thing insured; and the question of the liability of the insurer limits itself to the question whether the
contingency insured may have been saved by jettison of the cargo is irrelevant to the risk. We are of the opinion
that the judgment appealed from should be reversed and the defendant absolved from the complaint.

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